Sukuks global issuances decreased by 3.1 pct in February - KFH

(MENAFN - Kuwait News Agency (KUNA)) Sukuks (Islamic bonds) on the global market experienced a slight fall in volume during the month of February 2014 with total issuances amounting to USD 9.07 billion, which is 3.1 percent lower than the USD 9.36 billion issuances in February of last year, Kuwait Finance house (KFH) said

KFH said in a report on Friday that the decline in issuances are led by Malaysia, issuing a total of 58 corporate sukuks, worth USD 2.6 billion, and 33 sovereign and government-related entity sukuks, worth USD 9.9 billion, in two months ended February this year, which is lower than the 99 corporate, worth USD 5.1 billion, and 37 sovereign and government-related entity sukuks, worth USD 12.6 billion, it issued during the same period last year

Meanwhile, Non-Malaysian jurisdictions issued a total 40 sovereign and government-related entity sukuks, USD 5.77 billion, in 2014, an increased number compared to the 21 issues, USD 3.87 billion, in 2013 for the same period

Nonetheless, there are a few milestones in 2014 to date. Maldives debuted in sukuks market in January with a 10-year corporate real estate sukuk worth USD 3.29 million. In addition, the GCC corporate sukuks market kick started with two landmark corporate sukuk issuances: Saudi Arabia witnessed the issuance by National Commercial Bank (NCB) worth SAR 5 billion, USD 1.33 billion, which marks the largest issuance by a financial institution in Saudi Arabia and the largest ever subordinated debt instrument issued by a financial institution in the MENA region

In addition, Dubai Investments Park (DIP) in UAE tapped sukuks market with a debut USD 300 million sukuk, representing the GCC's first USD sukuk issuance this year. The DIP issue received tremendous response and was oversubscribed by 13 times which represents one of the highest levels of oversubscription achieved by a corporate issuer in the international sukuk and conventional markets from the region

Analyzing by country of sukuk origination, Malaysia continues to account for the largest share of the sukuk market with a USD 6.62 billion volume or 73 percent of the issuance total in the month of February. Other notable jurisdictions include Saudi Arabia with a 14.3 percent share, spearheaded by the sole USD 1.5 billion sukuk issuance by NCB, Turkey with a 6.8 percent share spurred by the TRY 1.33 billion sovereign issuance, and finally the UAE with a 3.3 percent share on account of the USD 300 million DIP sukuk

Other issuances included regular local currency salam sukuk issuances by the Central Banks of Bahrain and Gambia worth USD 141.1 million and USD 3.9 million respectively. The Indonesian government also issued a 6-month sovereign sukuk worth USD 83.7 million in IDR

Sovereign issuers made up 63.6 percent of the primary market in February, while corporates accounted for 28.1 percent and government related entities took the remaining 8.3 percent. The figures stand in contract to the previous month of January where corporates had a comparatively smaller share of 15.9 percent while sovereigns and government related entities had larger shares of 72.2 percent and 11.9 percent respectively

By currency, the Malaysian ringgit accounted for 64 percent of issuances during the month, followed by the Saudi Riyals, 14 percent, and the US Dollar, 12 percent

A total of 50 sukuks were issued in February vs. 85 sukuk in January. Among these, 16 were issued by the corporate sector totaling USD 2.54 billion, 31 by sovereigns totaling USD 5.77 billion, and 3 by government related entities worth USD 756 million.